The real-time market on the Indian Energy Exchange saw market clearing prices plunge to near-zero levels on Sunday due to a surge in power supply and a simultaneous dip in demand caused by unseasonal rains and thunderstorms.

Prices began falling from the 06:30–06:45 time block and remained low until 12:45–13:00, with the market clearing price remaining at nearly ₹0/kWh between 09:00–13:00 hours. During this period, supply far outpaced demand, with sell bids routinely outweighing purchase bids by five times.

The market clearing price during this period was lower than the exchange fees, which stood at ₹0.02 (~$0.00024)/kWh.

Image credit: IEX

The decline in demand, which fell nearly 2% compared to the same period last year, resulted from thunderstorms and cooler-than-average temperatures across North and Central India, reducing the need for air conditioning. At the same time, all major power sources, including thermal, hydro, solar, and wind, remained operational. Coal projects were also running at full capacity, further adding to the surplus in supply.

Although buyers paid very little for electricity, solar developers missed the opportunity to earn revenue from clean energy generation. This development highlights the growing disconnect between the cost of generation and prevailing market prices. Unlike many other countries, India does not have a demand-side management market that allows commercial and industrial consumers to adjust usage based on real-time price signals.

Selling power at such low rates is not financially viable. Power generators could achieve better returns if this excess energy was stored in battery energy storage systems (BESS) and supplied during peak demand hours.

Mercom had previously written on the growing importance of BESS as a key solution for balancing power generation and consumption, especially as India’s grid becomes more complex with the increasing integration of renewable energy. BESS plays a vital role in stabilizing the grid by smoothing out fluctuations in renewable power output and enabling the use of surplus energy generated during the day to meet peak demand in the evening.

According to the National Electricity Plan released by the Central Electricity Authority, India will need nearly 74 GW/411 GWh of energy storage capacity by 2032. This requirement is crucial for supporting the integration of an estimated 364 GW of solar and 121 GW of wind energy capacity.